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Selling and Operational Adaptation in China

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Selling and Operational Adaptation in China

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Selling and Operational Adaptation in China

Apart from adapting to the Chinese culture, you may find yourself having to reassess the way you traditionally operate and conduct business. Here are some things to think about when you're planning to expand a business to China:

  • Will you be able to easily obtain the raw materials you require?
  • Will you be able to import all the materials you need?
  • Will you be able to find skilled workers in China?
  • Will you be able to take current employees, if needed?
  • Are you obliged to employ nationals?
  • Are you prepared, if necessary, to increase workforce and productivity?
  • Are you familiar with the laws, regulations and trade barriers that could affect your business?

Selling and getting your goods to market

To improve the chances of successful business expansion in China, you need to consider a few key issues. Sales presence, for instance, should be a top priority. Will you sell directly? Will you trade over the internet? Perhaps trade shows are more suitable? Could you benefit from a local partner who knows the market? Here are a few fundamental choices:

  • Get yourself a Chinese distributor who has a proven track record of selling on a local or national level.
  • Find sales agents who can either sell your products or services, or alternatively acquaint you with potential clients or customers.
  • Joint ventures with local companies have gained in popularity, primarily because of their knowledge and established presence in the market. It is often a pricey option but lessens the risk.
  • Set up an office in China, ensuring maximum control on all operations. This is obviously the most expensive of all your options.

When considering the distributional needs of your business, it is essential to account for the logistical factors which could affect it. These include things, such as:

  • Your goods: are they fragile, expensive, perishable? Do they need to be kept at a certain temperature?
  • Are your goods live, or considered dangerous, and, if so, can you meet the requisites of customs and excise, or health and safety?
  • How regularly will you deliver? Daily, weekly, monthly? Can you find a distributor who can accommodate this?
  • Can you foresee the dates / times you'll need to distribute?
  • Have you worked out the transportation costs? Air freight and couriers are fast, but also the most expensive forms of freight.
  • Reliable and invariable collection and delivery times, which offer accurate predictability and time-traceability
  • Awareness of transit times so you can plan around them
  • Freight security
  • Fuel price fluctuation
  • Effect of congestion or delay
  • Infrastructure

The infrastructure of a country could prove integral to the success of your business. Consider logistical reasons that your business found domestic prosperity: was it the ease of which you could run it? Reliable distributors, maybe? An efficient transportation network?

It is important to contextualise these issues with the country you are expanding to: ultimately, can it offer the same logistical benefits?

Infrastructural spending has been increasing by 25% year on year, slowly turning China into a fully developed nation. Much money is accordingly being spent. Almost 80% of China is topographically mountainous, so if you want your product to have accessibility to isolated areas, remember to allow time for appropriate transport.

The major international airports of China are Hong Kong, Beijing, Guangzhou, Pudong, and Hong Qiao. Although much used in big cities, air transport is seldom used for rural areas in fact, road and river freight can take the same amount of time and are cheaper.

China is creating the first ever airport free-zone. Upon completion due 2010 it will allow cargo to be transported without facing formal customs or import duty, etc.

China's network of roads is only second to the USA: it has a total span of 1,700,000 km. 19,000 km of this is express-way.

The sea ports of China are considered its most important gateways, especially for its $2 trillion trade with the USA. It ranks top in the world in terms of both freight weight and number of containers managed.

Wholesale

Traditionally, wholesalers are used for selling low-value directly to retailers and, occasionally, the public and businesses. It is an economic way of targeting and reaching vast numbers of people quickly, and frees you from the burden of contacting retailers individually.

Distributing products in bulk not only means products sell faster than one-at-a-time, but it also allows your business to grow at a quicker rate.

Dispensing products and collecting money is generally considered more manageable and easy than dealing with a variety of customers. However, both the wholesaler and retailer will add their own mark-ups, meaning your profit margin will be less than full potential.

Just like with distributors, do some meticulous research into the wholesalers available. Here are some things to think about when choosing an appropriate wholesaler:

  • Their client base: a healthy wholesaler-retailer relationship can only increase sales
  • Will you want to limit sales only to retailers that suit your product's image?
  • How well-established is the wholesaler? A national presence could help bring your company to the forefront of the market
  • Will the wholesaler appreciate your product? If it already sells a competing product, how will it negotiate pushing yours too?
  • Will you have a say in the price the wholesaler sets for your goods?
  • Will the wholesaler do its best to promote your goods to its clients?
  • How will the supply exchange operate? Minimum order levels / resupply?
  • Will you be restricted in any way, such as limitation on distributing through alternative channels?

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